What Google wants is to condemn Microsoft to the electric chair

The dominant technology company of its day finds itself threatened by an upstart competitor that is seizing control of a powerful new network. Microsoft v Google? No, General Electric (GE) v Westinghouse. The continuing Yahoo takeover battle has pushed into public view a broader business conflict that's been simmering for a couple of years. The internet giant Google has been chipping away at Microsoft's hold on the personal computer industry, and Microsoft has been struggling to counter Google's growing hold over our PCs.

But this high-tech war is not without precedent. A similar fight between American industrial titans played out more than a century ago.

In the 1880s, Thomas Edison's GE ruled the rapidly growing US electricity industry. It supplied the parts and the plans, the hardware and the software that companies used to build their in-house generating stations. Edison's direct current systems provided the power that brought factory machines to life and lit lamps across the country.

But George Westinghouse had a different idea. Drawing on the inventions of Nikola Tesla, Westinghouse pioneered an alternating current (AC)network that allowed electricity to be served up by huge central power plants. Manufacturers could now just plug into the grid.

Edison fought the new system fiercely. Seeking to spread fears about the high voltages carried by alternating current lines, he sponsored a series of grisly public exhibitions in which animals were hooked up to AC generators and given fatal shocks. He even convinced the New York legislature to begin electrocuting death-row prisoners with a Westinghouse dynamo.

When, in the summer of 1890, an axe murderer named William Kemmler became the first convict to be put to death in New York's new electric chair, a newspaper announced the news with the headline "Kemmler Westinghoused". That must have pleased Edison, but his pleasure was to be short lived. Companies soon opted to use the cheaper current pumped out by the big new utilities that were sprouting up on the AC grid.

Today, an analogous industrial transformation is under way. This time, it's computing that's turning into a utility service supplied over a grid.

Until recently, software had to be run privately, on the hard drives of PCs or in the data centres maintained by corporations. But as the fibre-optic internet has grown in capacity, it has become possible to run software in central plants and distribute it to users over the network. As with electricity, the central supply of computing is in many cases proving more efficient, and cheaper, than private supply.

Google has emerged as the Westinghouse of utility computing, the groundbreaking supplier that proves the viability of the new technology. It has been erecting massive server farms across the world to provide a wide range of software programs, from web searching to video sharing to word processing, to homes and businesses. Microsoft, for its part, finds itself in the GE role, hoping its customers will continue to buy expensive software and run it on their own machines.

Microsoft is also hedging its bets. It has begun building its own server farms to compete with Google in supplying utility services. And last week it announced that it will begin offering some of its most popular business programs as services delivered over the internet.

A century ago, GE managed to change its stripes. When it became clear that Westinghouse would win the day, it abandoned Edison's system and shifted to supplying AC gear to the new utilities. Even more important, it began supplying a wide range of new consumer appliances designed to run on the electric grid. It found even better businesses to replace the one it lost.

Microsoft may be able to reinvent itself with equal success. First, though, it will have to meet the challenge posed by Google, a fierce competitor that would like nothing more than to Westinghouse Microsoft.

· Nicholas Carr is the author of the new book The Big Switch: Rewiring the World, from Edison to Google.